On the Question of Key Rate Reduction

Since October 2024, the key rate in the Russian Federation exceeds the profitability of a significant number of economic sectors, resulting in such risks as difficulty in lending, the possibility of sliding into recession, and the emergence of a monetary overhang due to individual deposit growth. Using the example of a similar situation in the USA in 1980-1982 with the help of the model of the shifting mode of reproduction (SMR model) the importance of additional commodity supply is shown, which was provided by a strong rise in import supplies. An alternative series of precautionary measures damping the negative effects of a key rate cut is also proposed. On possible options, approximate calculations of the consequences were made with the help of the SMR model.